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Stocks rally but investor caution remains
Last week saw a rally on the HCM City Stock Exchange with improved trading value and volume, ending a two-week decline. However, cautious investor psychology continued to significantly affect the market.
Penny stocks were the centre of attention during the week, particularly shares in securities and mining companies. Blue chips performed less positively than the market overall.
On the HCM City Stock Exchange, the VN-Index closed on Friday at 425.56 points, a gain of 0.77 per cent over the previous week's close. During the week, the average daily value of trades totalled nearly VND600 billion (US$28.5 million), an increase of 48.5 per cent over the prior week's level.
On the Ha Noi Stock Exchange, the HNX-Index tumbled 0.78 per cent to 70.34 points. Trades rose, however, to an average of VND503 billion ($23.9 million) per session, an increase of 41 per cent.
Last week also marked the first successful merger between listed banks. After seven months of preparation, Habubank (HBB) was finally merged into Sai Gon – Ha Noi Bank (SHB).
HBB shares were sold heavily during the last two sessions of the week, as investors feared they could lose profit by holding onto the shares. "The merger also adversely impacted transactions by foreign investors," noted ABC Securities Co analyst Cao Tan Phat.
Over 900 businesses that had previously suspended production began operating again in July, suggesting a better business environment, according to the General Department of Taxation. Pointing to further signs of an improved economy, the department also reported that the number of enterprises to report profits in the second quarter of the year rose 2.5 per cent over the first quarter, and that nearly 47,000 new enterprises were also established last month.
"This data suggests that business performance is improving thanks to Government support such as reduced interest rates, boosted credit growth and lower taxes," said Sai Gon – Ha Noi Securities Co analyst Doan Thi Anh Nguyet.
However, she admitted, the economic improvement needed to be reflected more clearly by other indicators, including growth, inventories, export turnover and the purchasing power.
Meanwhile, ratings agency Moody's reaffirmed Viet Nam's negative foreign and local currency bond rating, saying that "the negative outlook reflects the uncertainties related to the financial health of the banking system and the State-owned enterprise sector."
Last week, the State Securities Commission, to help improve investor psychology, announced that it would allow shares to be resold on the third day after an initial transaction (T+3) and they expanded allowed trading margin on the HCM City exchange from 5 to 7 per cent.
These measures nevertheless failed to impress investors or attract more money into the market, commented FPT Securities Co analyst Nguyen Van Quy.
"We are not too optimistic about economic prospects or short-term prospects for business development," Maritime Bank Securities Co analyst Tran Quoc Hoan wrote in a report. "However, the Vietnamese stock market is forming a new foundation for a rally at the end of the third quarter."
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